ENSC: Continues to Fight a Plague on Society

·3 min read

By Brad Sorensen, CFA



Ensysce Biosciences (NASDAQ:ENSC) is a clinical stage pharmaceutical company dedicated to bringing a novel opioid to the market. ENSC is committed to finding a solution to the opioid crisis plaguing the US and other developed countries around the world. Through its proprietary TAAP technology Ensysce is in the process of receiving approval for an abuse-resistant yet still pain-relieving opioid.

The company provided a business update on August 17th which highlighted some more positive developments and illustrated why we continue to view ENSC positively. Among the highlights:

• In July, the company announced the initial dosing of patients to study whether, as the company believes, its PF614 drug resists the ability for patients to abuse the drug through nasal inhalation.

o Current opioid analgesics on the market can be snorted, leading to a greater ability to misuse and abuse the substance.

o Due to previous studies that appear to show activation of PF614 requires contact with the trypsin enzyme, which is only found in the small intestine, the company is confident that the study will have positive results.

• The company also announced in July results from the bioequivalence study for PF614 comparing the effects of the release of that drug versus those of OxyContin.

o The study showed, according to the company, that PF614 conformed to the bioequivalence acceptance criteria for the area under the curve (AUC), relating to extent of exposure and time to clearance from the body, and maximal blood concentration when compared to OxyContin under both fasted and fed conditions.

o The company believes this data will support the 505(b)(2) regulatory path—which is an abbreviated path to FDA approval.

o Management believes this data will allow the company to move toward discussing Phase 3 plans with the FDA at the end-of-Phase 2 meeting in 2023.

• The company also announced that on August 8, the $8 million convertible note financing was completed with the final $4 million in funding received.

o The notes are convertible into shares of ENSC at a conversion price of $0.545—a 10% premium to the base price set at the time of the initial closing.

o The notes have any interest rate of 6% and mature 18 months from the applicable closing date.

o Warrants were also issued, which give the right to purchase up to 4,667,890 shares of ENSC at an exercise price of $0.7085, a 30% premium to the conversion price.

• The company announced 2Q2022 earnings of -$0.24/share, roughly in line with expectations and not a surprise given the stage of development the company is in.

o Federal grants fell to $200k for 2Q as funding under the MPAR grant was reduced because the annual limit was reached. The next year of funding for MPAR was approved for $2.8 million through June 30, 2023.

o Cash on hand at June 30, 2022 was $3.7 million—an amount we view as healthy and allowing the company to continue toward the approval process.

These developments, in our view, continue to bolster the case for investing in Ensysce Biosciences and further supports our enthusiasm for a company pursuing a technology meant to tackle the scourge of opioid addiction. We are anxiously awaiting further results from the ongoing trials and, at this point, are expecting those results to reveal more positive results—further bolstering the investment case for Ensysce.

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